NEW YORK (Reuters) - World stock markets rose on Wednesday, with Wall Street tipping higher on gains in technology and energy shares, while oil rebounded from a steep sell-off as U.S. government data pointed to strong demand.

The benchmark S&P 500 stock index .SPX ended higher after falling 3.5 percent over the previous two sessions, but a strong rebound gave way to a selloff late in the session that left gains in modest territory. The Dow Industrials .DJI ended little changed in thin trading volume a day ahead of the U.S. Thanksgiving holiday.

Crude oil prices climbed after U.S. government data showed strong demand for gasoline and diesel, though concerns over rising crude supply remained. U.S. crude prices on Tuesday sank to one-year lows.

“It’s a cautious, measured recovery to recapture some of the lost share price from the past few days,” said John Carey, managing director and portfolio manager at Amundi Pioneer Asset Management in Boston.

“Oil is a big part of it. ... It’s brought about an improvement in cyclical stocks,” Carey said, referring to gains in shares of energy and materials companies.

U.S. stocks also found support on speculation that the Federal Reserve could ease up on its path of interest-rate hikes, said Chad Morganlander, senior portfolio manager at Washington Crossing Advisors in Florham Park, New Jersey.

A report from MNI suggested that the Fed may pause its rate hiking cycle as early as spring 2019.

U.S. stock and bond markets will be closed on Thursday for the Thanksgiving holiday and open for a half-day on Friday.

Brent crude LCOc1 futures settled up 95 cents, or 1.52 percent, at $63.48 a barrel,. U.S. crude CLc1 futures settled up $1.20, or 2.25 percent, at $54.63 a barrel.

In currency markets, the euro rose on hopes that the Italian budget dispute would be resolved even as the European Commission took its first step toward disciplining Italy over its deficit.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., November 21, 2018. REUTERS/Brendan Mcdermid

“Any type of hostility amongst the (European) Union has major implications not only on the European financial system but also the global financial system,” Morganlander said. “This is maybe pushing away some uncertainty, but it’s too soon to tell.”

The dollar index .DXY, which tracks the greenback against a basket of six major currencies, slipped 0.1 percent after having advanced in Tuesday’s risk-off session.

In the U.S. Treasuries market, benchmark 10-year notes US10YT=RR last fell 5/32 in price to yield 3.0646 percent, from 3.048 percent late on Tuesday.

Reporting by April Joyner; Additional reporting by Sujata Rao in London and Shinichi Saoshiro in Tokyo; Editing by Nick Zieminski and Leslie Adler